Riggings Homeowners, Inc. (“Riggings”), has filed suit against Hartford Insurance Company of the Midwest (“Hartford”) for damages sustained to Building 1 of the condominium association during Hurricane Joaquin. In a 10-count complaint filed in the U.S. District Court for the Eastern District of North Carolina,1 Riggings alleges that Hartford “has a pattern and practice of wrongfully denying larger, legitimate flood insurance claims.”

Background. Riggings is a Condominium Association in Town of Kure Beach, North Carolina, comprised of 4 buildings, 2 of which are located adjacent to the Atlantic Ocean. Riggings alleges that Buildings 1 and 4 suffered substantial flood damages during Hurricane Joaquin in October, 2015. According to Riggings, the mechanism of damage to buildings 1 and 4 “(i.e., wave energy and flooding events produced during Hurricane Joaquin) … were the same, and the types of damage were substantially similar, as were the required repairs.” According to the complaint, three days after the hurricane the Kure Beach building inspector could see Building 1’s concrete subfloors of the erosion. Hartford’s engineers, DONAN Engineering Co., Inc. (“DONAN”) inspected Building 1 two weeks after the loss and Building 4 almost six weeks after the hurricane. Despite Riggings’ requests and Hartford’s promises to provide DONAN’s reports, Hartford failed to provide them and Riggings engaged its own experts to assess the damages.

Payment & Denials. On January 19, 2016, Hartford issued a revised/proposed proof of loss for Building 4 in the amount of $11,455.09, to which Riggings responded with a revised Proof of Loss totaling $640,013.37, based upon its own expert reports. DONAN performed an additional review of Building 4 and Hartford ultimately approved damages to Building 4 totaling $578,034.98. In the interim, however, Hartford issued a total denial of the claim for Building 1.

Plaintiff’s Allegations. Riggings’ Complaint asserts claims for breach of contract, negligent misrepresentation, unjust enrichment, violation of the NFIA and bad faith. Among other allegations, Riggings states that Hartford knew that Riggings was waiting on the information to file its claims and accuses Hartford of withholding the information in DONAN’s reports in an effort to “frustrate plaintiff’s timely filing of proofs of loss.” In addition, and most importantly, Riggings alleges that Hartford’s denial letter Riggings received on February 11, 2016, was “inexplicably dated January 4, 2016.” Riggings alleges that “Defendant deliberately either back-dated the January 4, 2016 Denial Letter or postponed service of said letter in an attempt to hinder or prevent Plaintiff from filing a timely appeal of the denial.”

In addition, Riggings raises a common and interesting issue for Condominium Associations. More often than not, condominium associations, such as Riggings, are comprised of multiple buildings. Often those buildings are built at approximately the same time and in a similar manner. Riggings argues that:

Hartford should be estopped and prohibited from arbitrarily claiming that the same type of loss/damage approved for Building 4 is not a covered type of loss/damage as to Building 1, particularly where Building 1 and Building 4 (i) are located in the same condominium complex, (ii) were constructed at the same time, (iii) are located on the same beach profile location … (iv) were issued substantively identical SFIP’s.

We will continue to monitor this case and keep everyone apprised as it progresses.
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1 Riggings Homeowners Inc. v. Hartford Insurance Co. of the Midwest, No. 17-cv-1, complaint filed (E.D.N.C., S. Div. Jan 3, 2017).